Valero Posts Higher-Than-Expected Profit Despite Sharp Refining Margin Decline
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Apr 24 2025
0mins
Should l Buy VLO?
Source: Benzinga
Valero Energy Corporation's Financial Performance: Valero reported first-quarter sales of $30.26 billion, exceeding analyst expectations, but saw a decline in adjusted operating income across its refining and ethanol segments compared to the previous year. The Renewable Diesel segment experienced an operating loss of $141 million.
Stockholder Returns and Market Reaction: Despite the mixed financial results, Valero returned $633 million to stockholders through dividends and share repurchases, and announced an increase in its quarterly cash dividend. However, shares traded lower by 0.4% premarket following the report.
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Analyst Views on VLO
Wall Street analysts forecast VLO stock price to fall
17 Analyst Rating
11 Buy
6 Hold
0 Sell
Moderate Buy
Current: 214.910
Low
149.00
Averages
186.56
High
223.00
Current: 214.910
Low
149.00
Averages
186.56
High
223.00
About VLO
Valero Energy Corporation, through its subsidiaries, is a multinational manufacturer and marketer of petroleum-based and low-carbon liquid transportation fuels and petrochemical products. The Company sells its products primarily in the United States, Canada, the United Kingdom, Ireland and Latin America. Its segments include Refining, Renewable Diesel, and Ethanol. The Refining segment includes the operations of its petroleum refineries, the associated activities to market its refined petroleum products, and the logistics assets that support its refining operations. The Renewable Diesel segment represents the operations of Diamond Green Diesel (DGD), and the associated activities to market renewable diesel, renewable naphtha, and neat SAF. The Ethanol segment includes the operations of its ethanol plants and the associated activities to market its ethanol and co-products. It owns 15 petroleum refineries located in the United States, Canada and the United Kingdom.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Production Capacity: Valero operates 15 refineries with a combined throughput capacity of approximately 3.2 million barrels per day, and its joint venture in Diamond Green Diesel Holdings LLC produces about 1.2 billion gallons of low-carbon fuels annually, indicating a strong position in the renewable energy sector.
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- Strong Performance of Major Oil Companies: Due to geopolitical risks, stocks of large integrated oil companies like Chevron and Exxon Mobil have reached 52-week highs, demonstrating their robust competitiveness in the global oil and gas supply chain.
- Optimistic Outlook for TechnipFMC: As a leading manufacturer in the energy sector, TechnipFMC benefits from increased capital spending driven by rising oil prices, with its stock trading near a 52-week high and projected EPS growth of 14% this year, reaching $3.34 by 2027.
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- Historical Lessons: The 2014 global supply glut that drove oil prices from above $100 to below $40 serves as a cautionary tale; although Venezuela's current supply is relatively small, concerns about a price collapse reflect market sensitivity to past events.
- Refiner Benefits: The influx of more heavy-sour crude into the market will benefit refiners, particularly complex Gulf Coast facilities capable of processing heavier grades, as this will widen the price differential between heavy and light crudes, enhancing refining margins.
- Market Volatility Changes: Should OPEC+ offset the new supply, overall price volatility may decrease; conversely, if they do not, the added barrels could smooth market fluctuations, indicating that the ceiling for future price increases may lower, impacting upstream companies' profitability.
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- Inflationary Risks Intensified: Rising oil prices are likely to drive overall inflation, particularly impacting costs in sectors like trucking and plastics, which may reduce consumer purchasing power and subsequently affect sales and corporate profits.
- Federal Reserve Policy Considerations: The increase in oil prices complicates the Federal Reserve's decision-making environment regarding interest rates, as inflationary pressures mount, even though the core PCE index excludes volatile food and energy costs, the indirect effects remain significant.
- Market Dynamics in Flux: The fluctuations in oil prices are closely tied to stock market performance, with WTI crude reaching $77.98 on Tuesday before retreating to around $74, indicating the market's sensitivity to oil price movements, necessitating a calm and discerning approach from investors amid uncertainty.
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Market Concerns: The markets are experiencing a downturn due to escalating fears of a prolonged conflict in Iran.
Oil Price Impact: Investors are worried that rising oil prices could negatively affect the global economy and reignite inflation fears.
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Investment Climate: Overall, it is becoming increasingly difficult for investors to find safe investment opportunities amid these uncertainties.
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